New Labour and Old Economics: a Profession in crisis

Written for Socialist Action, this was the first paper in which I looked in detail at the empirical evidence that inequality between nations was growing, and caused by neoliberalism. It focussed also on the open theoretical crisis of economics, which came to be one of my principal concerns in the following years.

The opening sentences:

“Why did God make economists? runs a US joke. To make the weather forecasters look good. ‘There was stuff left over from the lawyers’ runs another answer. The reputation of the economists stands at such an all-time low that their most popular web-page, featured in International Business Week, has nothing in it but jokes about them.

“‘Economists from the International Monetary Fund and the World Bank preach salvation through the market to the Third World.’ writes Paul Ormerod in his recent Death of Economics (1994:p3). Yet ‘[E]conomic forecasts are the subject of open derision. Throughout the Western world, their accuracy is appalling. Within the past twelve months alone, as this book is being written, forecasters have failed to predict the Japanese recession, the strength of the American recovery, the depth of the collapse in the German economy, and the turmoil in the European ERM’.